United States: Standing Together To A Point: Spokeo Holding Reflects Broad Supreme Court Agreement On Standing Rules In Actions Raising Statutory Violations

Amid the meteoric rise of statutory damage class action filings, the Supreme Court laid out ground rules on Monday for when a case meets both components of the injury-in-fact requirements of Article III.

In a 6-2 opinion in Spokeo, Inc. v. Robins, No. 13-1339, written by Justice Samuel Alito, the Court held that a named plaintiff in a federal class action complaint cannot establish Article III standing solely by alleging a statutory violation that carries with it a statutory damage provision. None of the justices, including the two dissenters, disagreed with that. Those types of allegations have become commonplace recently in federal courts by way of Telephone Consumer Protection Act ("TCPA") and Fair Credit Reporting Act ("FCRA") class actions. Both statutes carry statutory damage provisions without requiring proof of actual damages. After the Ninth Circuit held that standing was properly established based on an alleged FCRA violation, the Spokeo certiorari petition was essentially a challenge to such a class action procedure. Although the Supreme Court clearly delineated the standing requirements for statutory damage plaintiffs, the effect of its holding is unlikely to drastically curtail the statutory damage class action trend.

In remanding Spokeo to the Ninth Circuit, the Court held that the appellate court correctly determined that the Spokeo plaintiff, Thomas Robins, alleged a particularized injury to satisfy the injury component of Article III standing. But the Court held a particularized injury alone is not sufficient. Importantly, the Court noted in a footnote that a class action "adds nothing to the question of standing, for even named plaintiffs who represent a class 'must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong.'" Op. at 6-7, n. 6 citing Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26, 40 n. 20 (1976). Rather, the injury must be concrete and particularized. And it noted that a concrete injury can include intangible harm that did not exist prior to its Congressional creation by way of a statute such as the FCRA or TCPA. Because the Ninth Circuit did not address whether Robins' injury was sufficiently concrete, that is, "'real' and not 'abstract,'" remand was necessary to consider "both aspects of the injury-in-fact requirement."

The dissenting justices, Ruth Bader Ginsburg and Sonia Sotomayor, agreed with much of the substance of the majority opinion, and in particular with the injury requirements to establish standing. They disagreed, though, as to the necessity of remand, arguing that Robins' allegations – including assertions that incorrect information about him was posted pertaining to his income, wealth and marital status – were sufficient to easily establish a concrete injury even if the Ninth Circuit didn't directly address it. And there was no reason to send back to the Ninth Circuit a case that could easily be resolved by the Supreme Court, they argued.

Nationwide, the long-awaited issuance of Spokeo is likely to lift stays of dozens of TCPA and FCRA cases where defendants challenged statutory-violation class actions by attacking the standing of the named plaintiffs. Where those plaintiffs alleged statutory violations and nothing more, relying instead on statutory-damage provisions for standing, Spokeo is clear that no standing exists. Yet where class counsel adjusted in advance to a post-Spokeo environment and included concrete and particularized allegations of actual harm to named plaintiffs, Spokeo is unlikely to significantly impact standing.

Bottom line:

A class action plaintiff cannot establish standing merely by alleging a statutory violation that carries statutory damages. But to satisfy the injury component of Article III standing, such a plaintiff must allege (and each class member demonstrate) additional actual harm in connection with a statutory violation to establish a concrete and particularized injury. And, as the Court recognized, "intangible injuries can nevertheless be concrete."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.